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E-scam Targets Lawyers, Involves Fraudulent Certified Checks and Wire Transfers
Virginia lawyers are being targeted by an e-mail scam that purports to retain the lawyer, then uses fraudulent certified checks or wire transfers to steal money from the attorney’s trust account.
The scam involves variations of the Nigerian swindle that has been spamming e-mail boxes for many years.
Virginia State Bar Ethics Counsel James M. McCauley described a fact pattern used in the swindle as it was described to him by a Virginia lawyer who was almost victimized:
In an e-mail, the scammer, who purported to be from Seoul, South Korea, contacted the lawyer by name and requested representation for collection of a large debt in another state. The lawyer sent the purported client his standard fee agreement — for one-third of the collection, or $383,000 in this case. The agreement was returned executed and signed.
Before the lawyer had done any work on the case, he received an overnight UPS package purportedly from the “debtor.” In it was a cashier’s check, drawn on an Ontario bank, for the amount of the alleged debt.
The lawyer called the bank and was assured there were funds to support the check. He was prepared to deposit it in his attorney trust account, draw his fee, and disburse the balance as instructed by the “client.”
However, the lawyer became suspicious, because he had done no work for this windfall. He consulted a local banker, who opined that the check was fraudulent. The lawyer did not deposit the check, put the matter aside, communicated with the “creditor” that the legal representation was terminated, and never heard back from the parties to the transaction.
If the story had ended the way it has for lawyers in other states, the supposed cashier’s check would have bounced and the lawyer’s escrow account could have been more than $1 million in arrears. He also could be facing a Virginia State Bar inquiry after his bank reported his bounced check. In addition, he could be explaining to real clients why checks he issued in their cases were returned for insufficient funds.
(See
ABA Journal article, “Bradley Arant Reportedly Scammed Out of More than $400K,” about a firm victimized in Tennessee. June 11, 2009.
http://abajournal.com/news/bradley_arant_reportedly_scammed_out_of_more_than_400k/. Also see “Lawyers Beware: Avoiding the Scams.” Oregon State Bar Bulletin. November 2008.
http://www.osbar.org/publications/bulletin/08nov/tips.html.)
The scam has many variations, including the locations of the scammers, the legal service the lawyer is “retained” for, and the instructions for what the lawyer should do with the money. Methods of payment used in the swindle include cashier’s checks, certified checks, and wire transfers.
Some of the scams are elaborate. For example, the scammers use the names of actual companies and set up a fake toll-free number in the name of the company to give the impression of legitimacy. They also research their victims by scanning advertisements, firm websites, and news sources. Their communications might be personalized.
So what’s a lawyer to do? Some suggestions:
- Be vigilant for the fact patterns in the victims’ stories.
- Review the January 8, 2007, OCC Bulletin article issued by the Comptroller of the Currency at http://www.occ.treas.gov/ftp/bulletin/2007-2.html.
- Confirm the existence of the bank the money is drawn on.
- Be aware that a bank may confirm that a certified check with a particular routing number was issued for a specific amount on a certain day, but counterfeit copies of that check might be in many lawyers’ mailboxes, or the check may have been altered. The lawyer may not be notified that it was counterfeit until weeks after deposit.
- To view sample counterfeit documents used in financial crimes, see the National Check Fraud Center site at http://ckfraud.org/counterfeitcks.html. Counterfeited checks may not be detectable by your local bank.
- For special alerts about counterfeit financial documents drawn on specific banks, see the Federal Deposit Insurance Corporation site at http://www.fdic.gov/news/news/specialalert/2009/index.html. The site includes a link for subscribing to alert notifications as they are issued.
- Try to research the purported client, the company he or she is representing, and any legal case they refer to.
- Firms in which several attorneys and staff have access to accounts should conduct internal control reviews, so that if someone in the firm falls prey to a scheme, the loss can be detected quickly.
- Where circumstances permit, wait for the check to clear before you disburse the funds. But be aware that, while deposited money usually has to be made available within five days under federal law, the check can bounce or be exposed as a counterfeit much later, and the burden is on the depositor to make up the loss.
Finally, as in any scam, remember that if it’s too good to be true, it probably is.
Updated: June 16, 2009